A graying world

As the global population ages, experts debate: is it apocalypse? Or opportunity?

Dan Headrick
6 June 2016

4 min read

For years, demographers, policy planners and politicians have fretted over the “silver tsunami” of worldwide aging. Recently, however, new thinking has emerged that challenges traditionally negative views about older societies. Gray, these ideas suggest, may actually be good. 

Like a menacing “X” on the map  of human history, transecting demographic trend lines show that, for the first time ever, the world’s elderly population is growing at a faster rate than its proportion  of youngsters. A 2013 United Nations “World Population Aging” report concluded that at current rates, people 60 years and older will outnumber children younger than 15 by 2047, in part because people are living longer and fewer are being born. 

Longer, healthier lives for more people would seem to be a human success story. But for years, demographers and government policymakers have been wringing their hands about a gathering “silver tsunami” that they warn could drag the world into a downward spiral: fewer workers, more old people requiring more care, higher healthcare costs, increased government outlays for social security and pensions, diminishing tax dollars to pay those obligations due to shrinking labor pools, stagnating economies, spreading poverty and global economic collapse.

HEALTHIER AND GREENER: GRAY IS GOOD

Faced with the inevitable, governments and businesses are rethinking old notions of aging. Maybe, new ideas suggest, being older is a good thing. After all, isn’t knowledge, experience, wisdom and skill worth something?

Laura Carstensen, director of the Stanford Center on Longevity in Stanford, California, said elders are not only more knowledgeable than their younger counterparts, but also more emotionally stable. Knowledge and stability are valuable resources for employers, particularly in knowledge economies.

A 2014 survey conducted by the Transamerica Center for Retirement Studies, meanwhile, found that 87% of the employers surveyed said older workers are a “valuable resource for training and mentoring”; 86% said they represent an “important source of institutional knowledge.” Employers said they would support flexible work schedules and other incentives to retain valuable employees, who would otherwise retire, for longer.

The National Academy of Engineers found that many companies are already focused on keeping older workers on the payroll longer,especially in technical fields. (Image © mediaphotos / iStock)

The National Academy of Engineering (NAE) in the United States found that many US companies are already active in retaining older workers. The NAE found an increase in policies aimed at extending the productive working lives of experienced employees, particularly in technical fields. The NAE also cited the new discipline of “human factors engineering,” which engineers and designers use to accommodate theunique needs of older workers when developing tools and processes for increased productivity. Such accommodations range from larger text displays to ergonomically redesigned manual switches that are easier for older, less nimble hands to manipulate.

WHERE GOING GRAY IS HARDEST

The aging trend hasn’t hit most of the world’s poorest regions. Isolated and increasingly urbanized “youth bulges” are growing in Pakistan, Afghanistan, Saudi Arabia, Yemen and Iraq while unemployment contributes to unrest. Sub-Saharan Africa cities are swelling with young people who abandon outlying rural areas, leaving the elderly to farm. And that means that even in developing nations, experts are concerned about aging.

“There is a real potential for investing in older populations to enhance prospects for development, but it’s not really mainstream thinking,” said Isabella Aboderin, head of aging and development programs for the African Population and Research Center in Nairobi, Kenya. For example, she said, 70% to 80% of the elderly in sub-Saharan Africa stay in rural areas, while young people move to growing cities.

“Small-holder farmers are mostly older; the people who remain doing the farming are mostly older,” Aboderin said. “The agricultural sector needs to be revitalized, for food security. Older adults are strategically important if you want to begin to change things.”

“THERE IS A REAL POTENTIAL FOR INVESTING IN OLDER POPULATIONS TO ENHANCE PROSPECTS FOR DEVELOPMENT, BUT IT’S NOT REALLY MAINSTREAM THINKING.”

ISABELLA ABODERIN
HEAD OF AGING AND DEVELOPMENT PROGRAMS, AFRICAN POPULATION AND RESEARCH CENTER

Governments are beginning to recognize the challenge, she said. In 2016, for example, the African Union adopted its first protocols on the rights of older people. If ratified by at least 15 member states, those rights become legally binding.

FEWER WORKERS, HIGHER PRODUCTIVITY

In developed countries, evidence of aging’s effects on the workforce is already evident. The aerospace and aviation industry in North America, for example, which powers many of the region’s defense programs, will lose about one-third of its workers to retirement in the next few years, according to industry officials, who have warned US Congressional lawmakers that action is needed.

“It’s about qualified people. They (aerospace manufacturers) don’t have enough of them,” said aerospace consultant Eliot Norman of US-based law firm Williams Mullen. Skilled workers are aging out of the industry at the same time that manufacturers have back orders sufficient to keep their plants humming for 12 to 15 years. And it’s not just the US: Petroleum, chemicals, mining, defense and aerospace in Europe started feeling the pinch more than a decade ago, according to a IBM economics report on aging workforce dating back to 2005.

Some countries are looking to immigration to replace aging workers. Others want to bring more women into the labor force, important because women live longer than men. China, whose over-65 population is expected to equal the total US population by 2050, scrapped its one-child policy in October 2015 and now allows couples to have two children.

“HOW MUCH MORE ARE WE GOING TO HAVE TO GET OUT OF PRODUCTIVITY IF WE’RE GOING TO KEEP UP THE GROWTH RATES THAT WE’VE HAD?”

JAMES MANYIKA
DIRECTOR, MCKINSEY GLOBAL INSTITUTE, SPEAKING ABOUT THE ECONOMIC CHALLENGE OF SHRINKING WORKFORCES

Falling employee headcounts in Germany, Italy, Japan and Russia mirror the aging trends in those countries. China and South Korea will soon follow, according to new research from the McKinsey Global Institute (MGI), the business and economic research arm of global management consulting firm McKinsey & Company.

The twin engines of expanding employment and rising productivity powered world economic growth over the past 50 years, MGI researchers say. Growing workforces are over due to population trends, but productivity can still climb. “The question is, how much more are we going to have to get out of productivity if we’re going to keep up the growth rates that we’ve had?” said James Manyika, a director at MGI. It’s a daunting challenge: productivity growth over the next 50 years must be 80% higher than the past 50 years to maintain global GDP at current levels. “That’s an extraordinarily high number.”

For 20 years, MGI has studied agriculture, manufacturing and automotive, food processing, retail and healthcare to understand how productivity might be increased. “We found opportunities to speed up productivity growth to 4% a year, which is more than enough to fully counter the demographic slowdown,” said Jaana Remes, a partner with MGI. Existing best practices and ongoing improvements are already increasing productivity. The rest must come through upgrades in capital and technology, long-term investment goals and non-protectionist economic policies, Reemes said.

No wonder gray has suddenly become good; for the first time in history, the world actually needs the experience, inventiveness and labor of its elderly population to maintain its standard of living. ◆

See why older populations are good for the economy:
http://bit.ly/GrayIsGood

Ultra-efficient retail

Tech partnership blurs lines between physical and virtual stores

Jacqui Griffiths

3 min read

A groundbreaking partnership among SES-imagotag, Atos and Dassault Systèmes is delivering seamless connections between the virtual and physical store. By combining electronic shelf labels with digital services on the 3DEXPERIENCE business solutions platform, the partnership enables services such as ‘click and collect,’ which permits customers to purchase products online and then pick them up at the retailer’s nearest physical store. Compass asked Guillaume Portier, vice president of marketing at SES-imagotag, about the project.

COMPASS: What key challenges do CPG and retail companies face when it comes to optimizing brands and categories?

GUILLAUME PORTIER: Retailers need to optimize efficiency and enable a consistent experience for shoppers across all channels. Services such as click and collect now represent more than 10% of total turnover for food retailers in France. Retailers need to make sure their staff can quickly locate the products customers have ordered. Often, trainee staff or interns will do the picking. With thousands of stockkeeping units in the store, they can’t know exactly where every item is located. That presents a challenge, as a misplaced item can mean a missed sale.

In addition, retailers need to ensure they are compliant with agreements on how and where they display the brands they sell. To be productive and effective, traditional retailers and stores need to evolve and capitalize on the digital possibilities.

  
What is the background of the Virtual Store project among SES-imagotag, Atos and Dassault Systèmes?

GP: There are some great synergies between the partners in the project. Our vision was to combine our knowledge and capabilities to create a virtual 3D replica of the store that provides real-time information on every product. This is done using electronic shelf labels (ESLs) and 3D models to connect the physical store to a virtual model.

We first tested the concept three years ago in a small store in France, and today it is also live in a superstore near Paris. The project is initially focused on optimizing the supply chain and helping the superstore to locate every product it has in stock so it can ensure efficient click-and-collect services.

How are you using innovative technologies in the project?

GP: ESLs are already used to provide smart displays for shoppers, but now we are using a geolocation system to enable those ESLs to give store employees the precise location of each product. This information is gathered by the software to provide a perfect 3D view of the store so the retailer can see where the products are in real time. As soon as they move a product you can see in 3D what is occurring, with all the associated key performance indicators. By converging these technologies, we can enable each store equipped with the system to compare its theoretical plan with the reality in the store. The result is real-time visibility to merchandising compliance, enabling retailers to make faster and smarter decisions.

What benefits has the project delivered so far?

GP: It provides precise, real-time information on the location of products, so the retailer can use it to improve the picking of products in-store. Before the project, staff at the superstore were able to pick up to 50 products per hour, but now they pick more than 100. They are also able to increase basket size because, if a product has been misplaced, they are now able to find it when they might otherwise have thought it was out of stock.

The system can also enable real-time reporting on whether the retailer is complying with its agreements with brands. It allows a new way of working with those brands, because retailers can try out changes in the 3D model to see if they work better. It can change the way retailers do business, with more data, greater precision and increased compliance, enabling a much better return on investment.

The digital opportunity today is to transform the supply chain from beginning to end. There is a lot of data from the products themselves and from customers’ interactions with ESLs. Retailers can capture that data in real time and analyze it to improve the positioning of products on the shelf and deliver a better shopping experience.

What achievements of the collaboration give you the most satisfaction?

GP: The real challenge is to make an innovative solution run in a real store that operates every day of the week with real customers. Because of its innovative nature, the Virtual Store project involves an ongoing process of assessing how things work and making corrections, and it’s important to work with a real store in order to demonstrate how the solution can benefit real businesses. This project began with a shared, disruptive vision, and the partners worked together to align our teams and identify a customer who was ready to take part. I am proud of our achievement in doing that. There is a lot of enthusiasm for the project from everybody involved.

What is the next step?

GP: There is so much we can do with the Virtual Store, and a lot of our achievements are still ahead of us. The primary aim today is to enable merchandisers, supply chain managers and IT managers to build ultra-efficient stores.

Ultimately, we are providing a powerful application to enable the omnichannel revolution by helping retailers to transform their business. There is potential to embed more modules and functionalities in the future, and retailers could use the 3D model of their store to enhance the online shopping experience for customers. They will be able to reimagine the way they merchandise and promote a product with 3D. ◆

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Toward a fusion-powered future

Scientists express confidence that fusion will provide all the energy future generations need

Lindsay James

4 min read

The potential of fusion power has been touted for almost a century. Although commercial production may not happen for decades, and renewable energy enthusiasts complain that megaprojects like ITER are resources away from more near-term solutions, small private startups report encouraging results that could make fusion a reality sooner.

Since the 1930s, scientists have believed it possible to mimic the processes that power the sun to create fusion energy. “To get a release of energy we need to fuse light atomic nuclei together to form heavier ones,” said Ian Hutchinson, a professor of nuclear science and engineering at the Massachusetts Institute of Technology’s Plasma Science and Fusion Center (PSFC). “To do this we need to heat gas from a combination of types of hydrogen to temperatures that are 10 times hotter than the sun – in excess of 100 million degrees Kelvin [on the Celsius scale, the temperature is nearly identical; on the Fahrenheit scale, approximately 180 million degrees]. We then need to confine the hot gases, which are known as plasmas. Most commonly, this is done via a ring-shaped magnetic chamber called a tokamak.”

Plasma is an electrically charged gas in which negatively charged electrons are fully separated from positively charged atomic nuclei. The chambers are called “tokamak,” a Russian word, because the first chambers were designed by Soviet physicists in the 1950s.

MAKING PROGRESS

Two high-profile projects – Joint European Torus (JET) and International Thermonuclear Experimental Reactor (ITER) – are attracting the most press coverage, but smaller, more modestly funded efforts may be advancing more quickly. 

JET, located at the Culham Centre for Fusion Energy (CCFE) in Abingdon, Oxfordshire, UK, is the world’s largest and most powerful tokamak. “Using JET, we have achieved the world’s first controlled release of deuterium- tritium fusion power [achieved in 1991] and the world record for fusion power,” said Greg Keech, an engineer at CCFE. That record, set in 1997, was 16 megawatts.

While this proved that it was possible to create energy from fusion, JET needed to input 24 megawatts to output that 16 megawatts of fusion power. “The next step is to get more energy out than we put in,” said Keech. “And that’s what ITER will do.” ITER, JET’s closest rival, is Latin for “the way.” With a cost of more than €13 billion (US$15 billion), ITER has been dubbed the world’s most ambitious energy project. A consortium of 35 nations is collaborating on ITER, working to create a tokamak twice the linear size and 10 times the volume of JET. “ITER is currently under construction in Saint-Paul-lez- Durance in the south of France and is designed to deliver 10 times more power than it consumes,” said Laban Coblentz, ITER’S head of communication.

“If successful in producing useful amounts of energy, the ITER project will lead to an industry-ready prototype that is expected to be the first fusion facility to provide electricity to the grid,” Keech said.

A MATTER OF TIME

If successful, these projects have enormous potential, particularly for developing, rapidly urbanizing countries that will need to produce sustainable energy on a large scale. “Fusion will transform our lives,” Keech said. “There will be abundant energy available to developing economies, industrializing countries, and the developed world alike.” Steven Cowley, director of the CCFE, puts it another way. “Fusion could power the world until it is swallowed by the sun in 4-5 billion years,” Cowley said. “It is the perfect way to make energy – except that it is very hard, and expensive, to do.”

There’s the catch. Because of the costs and complexities involved, Keech said, the ITER project isn’t expected to be completed until 2025 DEMO – shorthand for “Demonstration Power Plant” – is set for completion in 2050. And fusion power, if the research succeeds at all, probably won’t be widely available until 2070. 

“FUSION WILL TRANSFORM OUR LIVES.” 

GREG KEECH
ENGINEER, CULHAM CENTRE FOR FUSION ENERGY

TOO GOOD TO BE TRUE?

Critics fear that these reactors will never be able to produce energy on a commercial basis and evoke the unknown risks of fusion reactors, which still produce radioactive waste, like their modern- day fission counterparts. “ITER is diverting attention from energy problems like renewable resources and energy conservation,” Charlotte Mijeon of Sortir du Nucléaire said in a 2013 article on SmartPlanet.com.

This is why Poland-based Jan Haverkamp, nuclear energy and energy policy specialist for Amsterdam-based Greenpeace International, argues that fusion power will never become a viable energy source.

“My professor of nuclear physics told me in 1979 that fusion power was 50 years away,” Haverkamp said. “It is still 50 years away today. 'The Energy [R]evolution Scenario,’ and other reports, show that renewables can power the world as we know it – and can do so in a more equitable way. Fusion power is simply a megalomaniac technical fix.”

Stewart Prager, director of the US Department of Energy’s Princeton Plasma Physics Laboratory (PPPL) in Princeton, New Jersey, sees such comments as short-sighted, arguing that it is foolhardy to disregard the possibilities of fusion power before the results are in. “Nobody knows if renewables alone could provide enough energy for the future,” he said. “We’ve already come so far, we can’t let time or costs get in the way.”

The interior of the Joint European Torus (JET) experiment, operated by Culham Centre for Fusion Energy (CCFE) in Abingdon, Oxfordshire, UK, on behalf of European fusion researchers. (Image © CCFE) 

AN ALTERNATIVE PATH

ITER, however, has been plagued by delays and cost overruns, which could reach more than US$50 billion (€43.5 billion), roughly 10 times the project’s initial estimate. Meanwhile, several smaller, stand-alone fusion projects in progress worldwide seem to be having better luck reducing both costs and time to market.

Hidden in the Santa Ana mountains just east of Irvine, California, Tri Alpha Energy is testing a linear reactor that it claims will be smaller, simpler and less expensive than a tokamak — which could lead to commercial fusion power in little more than a decade, far ahead of the 30- to 50-year estimates for tokamaks.

Meanwhile, in Burnaby, Canada, researchers at General Fusion have designed a reactor that uses pistons driven by steam; the company has raised about US$100 million from venture capitalists and the Canadian government. “If General Fusion is successful, it will lead to real fusion power plants decades ahead of other approaches,” said Michael Delage, the company’s vice president of technologie and corporate strategy.

Overall, industry experts are confident in the future of fusion. “It is an exciting time,” Delage said. “We certainly believe it is likely that one or more of the projects across the globe will be successful in producing electricity from fusion in the years ahead.”

Fusion not only will happen, Hutchinson believes, but it must. ”While there’s a considerable amount of work to be done, fusion is an essential energy for future generations.”

The potential, Prager said, would be world changing. “I have no question that fusion power is the future,” he said. “It’s hard to capture in words my excitement about the impact that it will have in the years to come.” ◆ 

Will fusion power become a reality?
http://bit.ly/FusionReality

Personalized assets

Under pressure to perform, asset managers and securities service managers borrow innovation tools from other highly regulated industries

Jacqui Griffiths

5 min read

Asset management and securities services organizations juggle competing priorities, challenged to deliver customer-centric products while increasing efficiencies and ensuring transparency Compass asked Amin Rajan, CEO of CREATE-Research, an independent global forecasting center based in the UK, how asset management and securities services firms can rise to the challenge.

COMPASS: What are the key challenges facing asset management and securities services businesses?

AMIN RAJAN: Markets have been jittery since 2008 and, as a result, clients are nervous about investing. In addition, experienced clients are becoming older. They’re getting closer to retirement and they haven’t got time to recoup any past losses. To bridge that deficit, regulators have been bringing in new laws and tightening the enforcement of existing ones. As a result, asset managers have come under huge pressure to think about new technological and product innovations.

How important is a customer-centric focus in addressing these challenges?

AR: It’s essential, because this industry can no longer afford to take customers for granted. They need to understand the customers’ needs and risk tolerances and deliver what they ask for. In the past, the asset management industry has been supply-led, but now it is becoming demand-led because customers are questioning their asset managers much more. Unless asset managers have a significant client focus, many of them will struggle.

What role does innovation play in achieving customer centricity?

AR: Innovation in the industry is absolutely vital because clients’ needs are changing. Meeting those needs will require new products, new asset allocation tools and new risk approaches.

One emerging trend is toward digital, self-service tools that enable clients to do self-directed online asset allocation, fund selection and risk monitoring – tasks that only asset managers could do previously. These digital innovations are in their infancy in asset management now, but they have huge potential to change the dynamic of the industry as a new generation of digitally savvy investors comes online over the rest of this decade. Clients will be in much better control than they have been in the past, and intermediaries will be challenged to provide better service, advice and added value. Those that are rising to the challenge are moving up the value chain and raising the bar for the rest of the industry.

How can asset managers and securities services firms benefit from the product development processes of other highly regulated industries?

AR: Such processes certainly have relevance in both sectors. Asset managers face competitive pressure in terms of how quickly they can bring a product to the market and how much they can spend on marketing, while securities services firms need improved planning control, faster time to market and strengthened enterprise collaboration. These are the areas where we are seeing some of those processes entering the industry.

Can you give us some examples?

AR: Right now, a minority of asset managers are able to do things like data aggregation, instant data analysis and getting insights out of their data. However, many businesses have legacy information technology (IT) systems which aren’t connected and remain a formidable barrier to progress.

“INNOVATION IN THE INDUSTRY IS ABSOLUTELY VITAL BECAUSE CLIENTS’ NEEDS ARE CHANGING. MEETING THOSE NEEDS WILL REQUIRE NEW PRODUCTS, NEW ASSET ALLOCATION TOOLS AND NEW RISK APPROACHES.”

AMIN RAJAN
CEO, CREATE-RESEARCH

How can asset managers leverage technology to improve innovation outcomes?

AR: Managers need a robust strategy that sets out how to nurture innovation from the initial capture of customer needs and wants through ideation, development, refinement, regulatory review, launch and redesign as the market evolves.

Our research has shown that 40% to 50% of asset managers think they’ve got that kind of a process, but often it isn’t as rigorous a process as the ones we see in other industries. Regulatory requirements make it more prominent that asset managers need to manage products for the long term. Currently, this process tends to be done using manual systems with low quality assurance. This is an area where innovation – particularly technology innovation – can make a huge difference.

Asset managers need a robust IT strategy that sets out how to nurture innovation, beginning with the initial capture of customer needs and wants, as the market evolves. (Image © sturti / iStock)

Which areas of innovation will shape the asset management and securities services industry in the future?

AR: There are three key areas of innovation that will shape the asset management industry. First, we’re going to see changes in asset allocation approaches, where money is allocated between different asset classes. Second, products such as private debt, which enable investors to lend money directly to a company, are really taking off, and we’re going to see similar new products in the future. Finally, digital DIY tools that enhance the customer experience will empower investors to do a lot more than they are able to do now and will demystify the craft of investing.

These changes will be incremental but they will happen. We’re talking about a phenomenon that’s still at the nascent stage, so we’re not seeing competitor leapfrogging yet. But, by the end of this decade, we’ll see a lot of that as the effects of what organizations are doing now come downstream. Technology is such a powerful force, and it will eventually redraw the contours of the asset management industry.

Similarly, in the securities services industry, innovation is occurring in several key areas such as payments and settlements, where technologies such as blockchain are rapidly changing the speed and collaborative nature of international transfers. Secondly, enhancing asset management “data intelligence” by leveraging big data has emerged as a focus area for asset servicers. Today, asset managers are demanding big data services from asset servicers, so in the near term this will be a competitive advantage for the servicer as well. Finally, firms are beginning to embrace technologies used in other industries that significantly improve the often-overlooked space of financial product development and lifecycle management, which will help these firms mitigate regulatory pressures and improve customer centricity as well. ◆

BNP PARIBAS SECURITIES SERVICES

BNP Paribas Securities Services, a fully owned subsidiary of the global BNP Paribas Group that specializes in securities custody, clearing and settlement operations for institutional clients, is the first financial services institution to leverage a sophisticated product development system like those used in aviation and life sciences to bring complex new products to market quickly in a highly regulated industry. BNP Paribas Securities Services then uses the system to manage and refine products as the market and its customers’ needs change.

To bring new products to market faster, it’s essential that BNP Paribas Securities Services be able to collaborate efficiently across its 34 sites. “We have lots of ideas and initiatives,” said Philippe Ruault, head of clearing, settlement and custody products at BNP Paribas Securities Services. “It’s extremely important that we have a consolidated view of all these initiatives and that they conform to the bank’s global strategy. Referencing all these product and service categories, and documenting them all in one place, is becoming highly complicated.”

To address these challenges, BNP Paribas Securities Services is leveraging automated product development technology – a pioneering move that supports the organization’s commitment to innovation while enabling faster time to market for new products and services.

The collaborative platform helps BNP Paribas Securities Services to capture information and to design, develop, validate and manage new products. It supports innovation among the company’s global teams, enabling real-time collaboration with all stakeholders across business lines, products and project phases. Management has full visibility on all ongoing projects, including their status and potential as well as their compliance with the company’s banking strategy. By digitizing its product catalog, BNP Paribas Securities Services also is able to redeploy existing services and components to tailor new solutions for its clients. This shortens the overall development cycle and enables the company to bring solutions to market faster.

“The initiative enables us to bring everyone together around an idea or a concept to validate its business case and decide whether we should invest in it,” said Sébastien Messean, head of product lifecycle management at BNP Paribas Securities Services, who leads the initiative. “It supports the validation and development of new products and the development and maintenance of existing products. We eventually want to include our clients in the product development process, and they will enable us to meet their needs more efficiently, more rapidly and more innovatively.”

To learn more about the solution BNP Paribas Securities Services is using, visit: http://bit.ly/SecuritiesServices

Discover the Innovation Factory Industry Solution Experience for Asset Management and Securities Services:
http://bit.ly/innofact

Animal advocates

Changing social perceptions of animal well-being impact all kinds of businesses

Jacqui Griffiths

3 min read

Mahatma Gandhi once said, “One can measure the greatness and the moral progress of a nation by looking at how it treats its animals.” Today, as consumers become increasingly convinced that animals are sentient beings with legal rights, Gandhi’s standard is being applied to businesses as well.

Questions surrounding humanity’s treatment of animals are big news, and they evoke strong emotional responses. In 2015, outrage at the shooting of Cecil the lion in Zimbabwe spread worldwide through broadcast and social media. Also in 2015, a lawsuit filed by People for the Ethical Treatment of Animals (PETA) in the US to have a crested macaque monkey declared the copyright owner of its selfie photographs raised the issue of whether animals should have the same rights as humans.

“There has been a progressive increase in beliefs about animal minds,” said Grahame Coleman, faculty professor of Veterinary & Agricultural Sciences at the University of Melbourne, Australia. “Work by Sarah Knight from the University of Portsmouth (UK) showed that, while medical researchers were more in favor of the use of animals in research than were pro-animal groups, both groups showed a strong belief in humanlike capacities in animals. Our own research indicates increasing awareness of the importance of livestock well-being among farmers as well as the general public, and a similar trend is occurring for cats and dogs among the general public.”

PERCEPTIONS OF VALUE

 In a commercially driven world, animals encourage humans to reassess their perceptions of value, said Sarah Fisher, a UK-based instructor of Tellington TTouch, a gentle approach to the care and training of all animals that also provides self-help for humans.
 
“We want to be valued, and animals act as barometers in this sense because they don’t care how much money you have; they care what you’ve got in your emotional bank account,” Fisher said. “People who engage with animals through TTouch often start shifting the focus of what is valuable to them. We had more people taking our courses during the recent financial crisis. People were saying, ‘Instead, of buying a new car, I want to reconnect with things that really offer value in life.’”

MUTUAL BENEFITS

Perhaps because of their increased associations with human values, animals are increasingly powerful ambassadors for businesses. For example, Fairmont Hotels & Resorts is employing “canine ambassadors” in its luxury hotels in Canada. Fairmont offers special amenities to its canine and feline guests, including water and food bowls, treats, toys and pet sitters.

Evidence that animals help to reduce stress in humans is also leading businesses to embrace pets in the office. A study by the Virginia Commonwealth University in Richmond, Virginia, found that employees who brought their dogs to work experienced lower stress levels, higher levels of job satisfaction and a more positive perception of their employer.

In medicine, reciprocity between humans and animals has the potential to generate better treatments as well as commercial opportunities. The One Health Initiative, in which human and veterinary researchers and clinicians work together to develop treatments for both markets, is growing in the US. Now the Humanimal Trust, a nonprofit based in the UK, is seeking to drive forward the adoption of One Medicine.

“Recent advances in genomics have helped us understand just how closely interlinked medicine is,” said Noel Fitzpatrick, professor, orthopaedicneuro veterinary surgeon and founder of the Humanimal Trust. “By working with veterinary partners, new innovations in the medical industry can be developed faster and more economically. You learn far more from working with a clinician who is treating real patients with naturally occurring diseases than you can from a laboratory animal model. Furthermore, the veterinary market is a major opportunity, and should be examined as another market segment in its own right.”

ETHICAL ATTITUDES

The relationship between humans and animals also is increasingly central to perceptions of ethical business. In 2015, for example, Mintel, a market intelligence firm with offices in 13 cities worldwide, questioned 1,500 UK consumers and found that 74% say meat coming from animals that are well looked after is among the top issues they consider when deciding whether a food company is ethical.

For companies that fail on animal welfare, the costs can be high. The UK-based Farm Animal Investment Risk and Return Initiative, which lobbies investors on animal welfare in intensive farming, cited the case of US-based meat packer Hallmark/ Westland in its report, “Factory Farming: Assessing Investment Risks.” When evidence of animal cruelty and health concerns emerged in 2008, Hallmark/Westland was forced into the biggest meat recall in US history. The report stated: “The recall cost them US$116 million (€100 million), but this was just the start of the costs and a further compensation settlement eventually forced the company into bankruptcy in 2012.”

“WE WANT TO BE VALUED, AND ANIMALS ACT AS BAROMETERS IN THIS SENSE BECAUSE THEY DON’T CARE HOW MUCH MONEY YOU HAVE; THEY CARE WHAT YOU’VE GOT IN YOUR EMOTIONAL BANK ACCOUNT.”

SARAH FISHER
INSTRUCTOR, TELLINGTON TTOUCH

Businesses that prioritize animal welfare stand to engage with some of the values consumers hold most dear. UK-based personal care products company Burt’s Bees, Belgium-based household cleaning products producer Ecover and Netherlands-based pet food manufacturer Yarrah Organic Petfood are just a few brands that are esteemed for their cruelty-free ethos.

“The world is watching closely as businesses operate and try to innovate,” Fitzpatrick said. “People appreciate animals as sentient beings, worthy of respect. Businesses need to adapt to this and to operate to high ethical standards.” ◆

See how the public reacted when Cecil the lion was killed:

http://bit.ly/CecilTragedy

Precision medicine

Gene sequencing helps drive a trend toward individualized treatments

Rebecca Gibson

7 min read

The medical industry is harnessing big data and analytics to deliver a new kind of clinical care, where treatments are tailored to the specific needs of individual patients based on knowledge of genetic, environmental and lifestyle data. But filtering out the data noise to find the true science remains challenging.

It took scientists 13 years and US$3 billion (€2.6 billion) to sequence the 3 billion base pairs of DNA in a single human genome during the worldwide Human Genome Project. Today, 15 years later, an individual’s genome can be sequenced for approximately US$1,000 (€878), often in about a day. Not only is the ability to sequence genomes cheaper and faster, making it easier to diagnose rare diseases in patients; it is also helping researchers to tailor treatments to specific individuals.

Four-year-old Jessica Wright from England, for example, suffered frequent seizures and developmental delay from birth. No one knew why – until she and her parents had their DNA sequenced, analyzed and compared as part of the UK’s 100,000 Genomes Project.

In January 2016, Jessica was diagnosed with GLUT1 Deficiency Syndrome, a non-hereditary condition that starves her brain cells of the energy they need to function properly. Her doctors prescribed a high-fat diet to provide her brain with energy, which will eventually reduce her epilepsy medication dosage. Jessica is one of many patients globally who are benefiting from this precision approach to medicine, and the race is on to extend the technology to all.

WORLDWIDE INVESTMENT

Global Genes, a California-based charity, estimates that 350 million people worldwide suffer from one of about 7,000 rare diseases, 80% of which are genetic. Consequently, technology companies, research institutes and governments worldwide are ramping up efforts to analyze vast volumes of health and genomic data, hoping to understand how and why individuals develop certain diseases and respond differently to treatments. Their goal: to develop precision medical treatments customized to a small group or, when required, to a specific patient, and to make such treatments affordable.

Activity is happening worldwide:
Google has teamed up with New York-based autism advocacy organization Autism Speaks to accelerate autism diagnosis, subtyping and treatment by sequencing the DNA of 10,000 families.
In Australia, researchers from Brisbane’s QIMR Berghofer Medical Research Institute and the Queensland University of Technology are exploring how genomics could personalize treatment for cancer and Alzheimer’s.
US President Barack Obama introduced a US$215 million (€189 million) Precision Medicine Initiative in his 2016 budget.
China’s government will invest US$3.09 billion (around €2.7 billion) in precision medicine research by 2030.

Shenzhen-based BGI Genomics, the world’s largest genomics organization, has already sequenced 1 million human genomes from people across China. It has also built BGI Online, Asia Pacific’s first cloud-based platform for precision medicine applications, with the help of Intel and China-based Alibaba Group.

“PRECISION HEALTH APPLIES GENOMICS AND BIG DATA PROACTIVELY AND PREEMPTIVELY TO PREVENT DISEASE, OR AT LEAST DIAGNOSE IT BEFORE IT BECOMES CRITICAL.”

LLOYD B. MINOR
CARL AND ELIZABETH NAUMANN DEAN, STANFORD UNIVERSITY SCHOOL OF MEDICINE

“Previously, medical institutions, pharmaceutical companies and clinical laboratories had to purchase expensive software and hire experts to analyze their data, but now they can use Intel’s algorithms to run complex gene sequencing in Alibaba’s public Ali Cloud by connecting to BGI Online,” said Xin Jin, leader at BGI Online and the company’s big datadepartment, adding that several hospitals are testing the service.

SOLID FOUNDATIONS

Supporting all of this innovation is big data – data on the terabyte-and-above scale – and analytics.

“Big data platforms enable us to collate vast sets of structured and unstructured content such as omics data about individuals – which comes from various sources – with socioeconomic, behavioral, geographical and environmental information, and then synthesize collected content to understand how known and unknown factors impact on individuals’ health,” said Naeem Hashmi, chief research officer at healthcare research company Information Frameworks.

Yves Levy, CEO of the French National Institute of Health and Medical Research, said he expects big data to play a vital role in the organization’s attempt to use sequenced genomic tumor data from 3,000 cancer patients to evaluate the efficacy of their medication.

“We’ll use Dassault Systèmes’ 3DEXPERIENCE platform to integrate big data into our processes and build virtual biological and chemical models to re-examine physiopathological pathways, improve our analysis processes and generate new hypotheses,” he said. “We expect it to transform biomedical research and have a tremendous impact on people’s health.”

GOING BEYOND DIAGNOSIS AND TREATMENT

Stanford University School of Medicine in California is taking precision medicine a step further, harnessing big data to analyze information from patient databases and wearable devices to predict, and potentially prevent, diseases.

“Precision health applies genomics and big data proactively and preemptively to prevent disease, or at least diagnose it before it becomes critical, which will significantly reduce the number of people undergoing specialized treatments,” said Lloyd B. Minor, Carl and Elizabeth Naumann dean of the school. “For example, we’re working alongside North Carolina-based Duke University and Verily (formerly Google Life Sciences) to record health data from devices worn by 10,000 people across northern California and North Carolina to track how their health status changes over a prolonged period of time. If a participant develops diabetes in 2021, we’ll be able to look back at their data and pinpoint early indicators, which could help us identify similar at-risk patients."

Part of Stanford Medicine’s precision health drive is advanced diagnostics, such as cell-free DNA (cfDNA) testing.“We can test minute quantities of DNA from a pregnant woman’s blood using cfDNA testing to detect whether her fetus has Down syndrome (trisomy 21), rather than using today’s expensive and risky amniocentesis tests,” Minor said. “Current cancer detection methods also are too expensive and complex to do routinely. But in future, cfDNA tests could be used for ongoing screening to detect cancers much earlier. This would be particularly useful for ovarian and pancreatic cancers, which typically only cause symptoms in the advanced stage.”

RECRUITMENT AND PRIVACY

To apply precision medicine to the development of individualized treatments, researchers must first study thousands, perhaps millions, of people.

“Tailoring treatments to an individual is possible, but to fully understand how their disease will manifest and respond to treatments we need to compare genomic and phenotypic data from as many people as possible – both those with the same disease and healthy people,” said Martin Landray, professor of medicine and epidemiology at the University of Oxford, UK.

However, while electronic medical records (EMRs), MRI scans and wearable devices are generating more healthcare data than ever before, patient privacy controls can make it difficult to share and analyze data on the scale needed to drive precision medicine.

Scientists at Shenzhen-based BGI Genomics have already sequenced 1 million human genomes from people across China. BGI’s cloud-based service supports medical researchers and hospitals. (Image © BGI) 

NHS England has therefore established 13 Genome Medicine Centres across the UK to recruit consenting patients for Genomics England’s 100,000 Genomes Project, which was launched in December 2014 to sequence 100,000 human genomes by 2017. Patient consent has already enabled Genomics England to sequence more than 7,000 genomes and bring researchers closer to achieving their aim of improving how they diagnose and treat rare and inherited diseases, as well as cancers.

“Until now, data has been collected either to treat an individual or anonymized and distributed for large-scale research,” said Tim Hubbard, head of bioinformatics at Genomics England. “But we’ve created an integrated infrastructure where data is initially analyzed for each patient, and then collectively to provide us with the vast data samples we need to compare people. We’ll be running around 100 genomes per day, so we’ve partnered with three external companies who have the computational power to analyze this volume of data. However, to maintain patient privacy, both commercial and academic researchers must analyze data from within our database in the UK Government’s private G Cloud."

Although the 100,000 Genomes Project has been funded as a one-off program, Hubbard expects whole-genome sequencing will eventually become economically viable for widespread use within NHS England. “We’ve developed a clinical data model and eligibility criteria for each disease we’re investigating, so we’ve essentially built a framework that can be expanded to explore precision medicine for conditions beyond cancer and rare disease in the future,” Hubbard said.

EXTRACTING MEANING FROM NOISE

To become meaningful, the masses of raw data must be in a format that can be easily analyzed by researchers and quickly queried by clinicians.

“When the UK Biobank has sequenced the genetic code of 500,000 patients, we’ll be able to use statistical imputation to calculate about 70 million genome variables for each patient,” Landray said. “The difficulty will be finding a way to interpret it. We need powerful analytics and algorithms to work out how these 70 million bits of information may, or may not, relate to certain diseases. Big data can also help us to detect unexpected patterns in MRI scans or data gathered by activity monitors that may not be obvious to clinicians.” 

However, most healthcare providers are simply not ready for the challenges of properly collecting, managing and analyzing big data.“Healthcare systems worldwide, especially in the US, are still very fragmented because each provider has its own IT system,” Hashmi said. “Often, different departments within the same organization, such as radiology and cardiology, operate disconnected EMR systems. Big data platforms offer immense potential for precision medicine, but unless we find a way to integrate disparate IT systems, share data freely while protecting patient privacy, and make analyzed data easily accessible so it can be incorporated into real practice, they will just become another silo that offers no real value.”

ANALYZING ALL FACTORS

Not all researchers are fans of precision medicine, however. Michael Joyner, physiologist and anesthesiologist at the Mayo Clinic in Rochester, Minnesota, cautions that solely mining genomic data for association between gene variants and disease can lead to false correlation. In fact, he said, studying socioeconomic and environmental factors could be more informative.

“WE NEED POWERFUL ANALYTICS AND ALGORITHMS TO WORK OUT HOW THESE 70 MILLION BITS OF INFORMATION MAY, OR MAY NOT, RELATE TO CERTAIN DISEASES.”

MARTIN LANDRAY
PROFESSOR OF MEDICINE AND EPIDEMIOLOGY, UNIVERSITY OF OXFORD, SPEAKING ABOUT THE UK BIOBANK

“Many perfectly healthy people have gene variants that have been implicated in disease,” Joyner said. “But as these often only slightly raise their risk, it’s likely that widespread genomic analysis of large samples of the population could give false positives. Precision medicine trials for cancer treatments have not met expectations, but introducing smoking bans and vaccinating people against the human papilloma virus have been effective. Plus, research indicates that gene score-based treatments aren’t necessarily more effective – it’s no more beneficial to use data about how a patient metabolizes warfarin [an anticoagulant that prevents blood clots] than their age and weight to adjust their dosage.”

A HEALTHY FUTURE

Despite such doubts, and a long road ahead before researchers and clinicians will regularly use genomics and big data to diagnose and treat large numbers of patients as part of common practice, the November 2015 report “Global Precision Medicine Market — Estimation & Forecast (2015-2022)” predicts that the global precision medicine market will hit US$88 billion (€76.5 billion) by 2022.

“The days when patients were separated from their medical data and excluded from the healthcare delivery process are long gone,” Stanford Medicine’s Minor said. “Precision medicine and precision health will require upfront investment; but ultimately, when we can predict and prevent or diagnose and treat disease early, we’ll reduce the resources and costs associated with tertiary care and, most importantly, we’ll help people to enjoy longer, better-quality lives.” ◆

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Car-sharing challenge

Automobile manufacturers scramble to grab a share of the market

Ursula Watson

4 min read

Disruptive automotive trends, including autonomous driving, connected vehicles and, especially, car sharing, are redefining customary vehicle ownership patterns and, with them, the automotive sector. Disruption can feel uncomfortable, but experts point out that it can also spur new ways of thinking – and traditional manufacturers are responding to the challenge.

Traditional automotive manufacturers are faced with a spate of disruptive trends coming at them from unexpected directions: High-tech firms such as Google and Apple are aiming to claim large segments of the autonomous vehicle market. China’s top online search firm, Baidu, plans to put self-driving buses on the road in three years. New market entrants such as XYT (See “A Unique Evolution“) design modular vehicles that can be easily personalized and upgraded over time, potentially eroding the market for totally new cars.

Of all the disruptive trends, however, many industry experts see car sharing as the biggest threat to the traditional automotive business model. Global consulting firm Roland Berger, for example, projects the car-sharing services market will grow by as much as 30% annually until 2020, potentially reaching €5.6 billion (more than US$6 billion) in global revenue. Every car shared is, potentially, a new car automakers won’t sell, especially to rental fleets and taxi companies.

Globally, for example, the Transportation Sustainability Research Center at the University of California, Berkeley found in its report “Winter 2016 Carsharing Outlook” that car sharing is already operating in 33 countries, five continents and more than 1,500 cities, with approximately 4.8 million people sharing more than 104,000 vehicles. Navigant Research predicts these numbers will grow to 23.4 million people by 2024, with revenue increasing from US$1.1 billion (€970 million) in 2015 to US$6.5 billion (€5.7 billion) in 2024.

BUY OR SHARE?

Such trends threaten traditional car sales, in which buyers purchase one or more cars for personal use and leave them parked the vast majority of the time. Thanks to that business model, global car sales reached 87 million in 2015, with manufacturers reporting earnings of more than US$130 billion (nearly €116 billion), all-time highs for both units sold and earnings, according to the report “The End of an Era,” by Sanford Bernstein, an investment research firm headquartered in New York City. As reported by Automotive News in February, Sanford Bernstein auto analyst Max Warburton wrote that 2016 may mark the end of such “golden-era returns.” He observed: “Chinese profits are rolling, the United States is getting more competitive, emerging markets are deteriorating, European margins remain dismal, and OEMs face multiple additional costs.” Looking at the threats created by Silicon Valley competitors and new, hyperconnected business models, he added: “When we put all these technology threats together we come to one simple conclusion: the cost of developing and building a car in five years’ time is going to be significantly higher than it is today, pressuring industry margins.“

Not surprisingly, therefore, business management consulting firm McKinsey & Company projects that global car sales will grow, but at a slower rate, declining from 3.6% growth in each of the past five years to just 2% growth annually by 2030.

Michelle Krebs, senior analyst at automotive consumer insights authority AutoTrader, however, believes that reports of doom for the automotive industry are exaggerated. “Will car sharing eliminate many vehicle sales? We don’t know that for sure,” Krebs said. “Cars as personal transportation are still very aspirational for many people around the globe, including young people. We have been fed the line that millennials are not interested,“she said, but recent studies tend to disprove that argument.

General Motors’ car-sharing service Maven will combine the company’s multiple car-sharing programs under a single brand. (Image © General Motors)

For example, according to the “Next Generation Car Buyers” and “What’s Driving Gen Z” studies conducted by US-based vehicle remarketing services company Cox Automotive, only 84% of older millennials (age 25-32) own a car, but 92% of the upcoming Generation Z (ages 12-17) owns or plans to own a vehicle.

A recent survey of 3,400 German respondents conducted by McKinsey also revealed encouraging attitudes toward vehicle ownership – 78% of respondents perceived that cars confer more esteem on their owners than other luxury items. Additionally, 70% of respondents aged 18 to 39 believe a car is the ultimate status symbol. Perhaps most importantly, McKinsey found that a majority of users see car sharing as an addition to, not a replacement of, their own car; more than 75% of today’s car sharers also own cars, the firm found.

EMBRACING DISRUPTION

Automotive manufacturers and their suppliers aren’t sitting by, however, waiting to see which side of the car-sharing argument proves to be correct. The automotive industry is aggressively ramping up its efforts to compete against ride-sharing companies like Uber, Zipcar and Lyft while initiating disruptive moves of its own.

In the US, the car-sharing market is owned primarily by traditional car rental companies that have long been loyal to auto manufacturers. Zipcar, for example, is owned by Avis Budget Group; along with Enterprise CarShare, Hertz 24/7 and Daimler’s car2go (also popular in Europe) – rental car companies control about 95% of the US car-sharing market, according to Auto Rental News.

OEMs are angling for an even more direct role in car sharing, however. In September 2015, for example, General Motors CEO Mary Barra described the company’s shift away from its traditional business model as “disrupting ourselves,“ with activities that include investing US$500 million (€441 million) into Lyft to create GM’s own national network of shared cars. The company also acquired most of the assets from Sidecar, a now-defunct ride-sharing service based in San Francisco. GM later combined its car-sharing assets to create Maven. In addition to generating new revenues with car sharing, GM said, it will use the projects to test hardware and software systems and gain insight into user experiences.

Meanwhile, in March 2016, Ford established FORD Smart Mobility LLC as a new subsidiary to design, build, grow and invest in emerging mobility services. Several ongoing pilot programs are under way including GoDrive, a London car- sharing program, and Dynamic Shuttle, a program at Ford’s Dearborn, Michigan, campus that allows employees and visitors to summon point-to-point rides on demand.

BMW’s DriveNow car-sharing program, operated in conjunction with Sixt, operates 2,400 vehicles in Germany, Austria and the UK. In April 2016, BMW launched ReachNow in Seattle with plans to eventually spread to 10 US cities. The service is priced by the minute and cars can be taken one way, provided they are left within a defined “home area.“

Toyota, meanwhile, announced plans in October 2015 to begin testing an electric car-sharing project in 2016 geared toward tourists on the island of Okinawa, Japan, to assess the viability of tourist-centered car sharing. Along with several partners, Toyota also is participating in a three-year car-sharing project using ultra-compact electric vehicles in the city of Grenoble, France. The project aims to make urban mobility smoother and alleviate traffic congestion.

“Everyone is putting their toe in because they don’t want to get left out in the cold,” Krebs said. “It is just like having a portfolio of stocks; you have to cover your bets.” ◆

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A model in the making

Virtual simulations of many-layered systems hold promise of taming complexity

Lindsay James

3 min read

Engineering complex systems involves unifying multiple disciplines, which often operate in silos and use a wide range of incompatible tools. Engineering for the Internet of Things (IoT) demands even more interconnections. Virtual prototyping with a model-based systems engineering (MBSE) approach – which uses integrated 3D digital simulations of all systems working together – promises relief.

The ability to effectively engineer a complex system is a mammoth undertaking. “The traditional method focuses first on structure – the parts and their interconnections – and assumes that the required behavior will be achieved by a suitable arrangement of interacting parts,” said Hillary Sillitto, a chartered engineer, fellow of the International Council on Systems Engineering (INCOSE), and author based in Scotland.

This “structure first” approach leaves itself wide open to conflicts among subsystems, however. “There are so many potential interactions that this approach can’t guarantee that there are no other undesirable or unacceptable properties or behaviors,” Sillitto said.

What’s more, the rise of the Internet of Things (IoT) is multiplying the challenge. “This exponentially growing web of interconnectedness is dramatically increasing the complexity, frequency and propagation of interactions in systems,” said Troy Peterson, fellow and chief engineer at US-based consulting firm Booz Allen Hamilton, assistant director for systems engineering (SE) Transformation at INCOSE and former lead engineer at Ford Motor Company.

German appliance manufacturer Miele, a leader in developing products designed for the IoT, knows these challenges well. “Product features are increasingly the result of complex combinations of hardware and software,” said Matthias Knoke, Miele’s head of virtual product development. “Many functions that traditionally were mechanical have been superseded by mechatronic subassemblies, which augment the range of functionalities considerably. More and more disciplines must be consulted and involved concurrently. Conventional development and testing methods are no longer sufficient.”

MODEL-BASED SYSTEMS ENGINEERING

Increasingly, organizations are exploring the potential of a model-based systems engineering (MBSE) approach, using virtual simulations to tame the resulting engineering complexity. Defined by INCOSE as “the formalized application of modeling to support system requirements, analysis, design, verification and validation, beginning in the conceptual design phase and continuing throughout development and later lifecycle phases,” MBSE promises to alleviate many of the challenges facing industrial equipment (IE) companies today.

USING 3D DIGITAL REPRESENTATIONS, “WE REMOVED COST AND WASTE FROM FIXING THINGS THAT ESSENTIALLY WERE NEVER BROKEN WHILE DELIVERING BETTER UPTIME AND PERFORMANCE TO CUSTOMERS.”

PAUL BORIS
HEAD OF MANUFACTURING INDUSTRIES, GE DIGITAL

Miele is already reaping the rewards. “Using MBSE superimposes a systematic approach onto product complexity, making it more manageable,” Knoke said. “Consequently, development lead times are shortened, with an associated reduction in research and development expenditure. What’s more, cooperation and communication between the various disciplines is improved.”

GE, a global provider of IE systems ranging from utility turbines to aircraft engines, also sees the benefits of MBSE. “This approach is crucial for a couple of fundamental reasons,” said Paul Boris, head of manufacturing industries at GE Digital. “By building a digital representation, we are able to include the conditions and stresses a machine endures. For example, we had a number of aircraft engines that were exhibiting a pattern of wear inconsistent with what was expected. Instead of taking them all out of service in the hope of catching the issue, we used the digital representation to map the use patterns of those specific devices.”

GE determined that the way the engines were being used precipitated their performance decline. “Dust from one region of the world is not dust from another,” Boris said. “We developed a wash system to rectify it. The issue was isolated to very specific engines in very specific regions, as was the fix. We removed cost and waste from fixing things that essentially were never broken while delivering better uptime and performance to customers.”

NASA, too, has embraced MBSE techniques to address the ever-increasing complexity of its spaceflight missions. “MBSE enables us to capture project information in a single-source-of-truth database and to communicate that information effectively to a large user community,” said Brian Cooke, a system engineer at the Jet Propulsion Laboratory in Pasadena, California. Cooke is working on NASA’s Europa Project, which is projected to explore Jupiter’s Europa moon sometime in the 2020s.

EXPEDITING WIDESPREAD USE

However, adoption of MBSE is limited to just a handful of in-practice examples. Roman Dumitrescu, managing director of strategy and R&D at technology network “it’s OWL” (Intelligent Technical Systems OstWestfalenLippe) and head of the SE department at Germany-based Fraunhofer Project Group for Mechatronic Systems Design, said that several factors are limiting MBSE adoption.

"An MBSE standard is missing, which includes well-defined processes on how to implement MBSE and specific profiles for the modeling of complex technical systems,” Dumitrescu said. “Furthermore there are not enough engineers capable of using MBSE, and there are almost no professional education programs.”

To achieve widespread adoption, Dumitrescu said, IE companies must define their own MBSE methodologies based on real engineering challenges. “They should start with less complex systems, but work also on processes and language profile,” he said. “IE companies need to make all of their engineers familiar with MBSE and create smaller teams of MBSE masters.”

Peterson agreed: “An appropriately scaled, focused and resourced pilot project, even if small, can clearly demonstrate the value of MBSE,” he said. “But it’s not a silver bullet. Transforming to a model-based approach that connects models from different disciplines and domains requires investment, commitment, leadership and expertise if it’s to become an enduring capability or provide a competitive edge.” ◆

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The last mile of distribution

Retailers are focusing on the final leg of a product’s journey to deliver improved customer value

Jacqui Griffiths

4 min read

The distance between the retailer and consumers’ hands is a rich source of engagement and the focus of intense competition as both online and brick-and-mortar merchants work to deliver the experience consumers want.

The ‘last mile’ of distribution – the journey of products from the retailer to customers’ hands – holds a number of challenges and opportunities for retailers. “Consumers increasingly want to choose their own scenarios when it comes to online ordering, in-store experience, home delivery and click-and- collect services,” according to the authors of “Rethinking the Value Chain,” a report produced by Capgemini and the Consumer Goods Forum. “Meanwhile, alternative distribution models are rapidly emerging. Companies such as Amazon are forcing the industry to rethink the last mile distribution model.”

Retailers need to consider factors such as local culture, geography, climate and tariffs to find the optimal way to deliver purchases and satisfy each consumer’s requirements. For example, while cost is the main challenge when it comes to last mile deliveries in the US, issues such as infrastructure and postal services are key concerns in other parts of the world, according to Chris Cunnane, a senior analyst in the supply chain and logistics team at ARC Advisory Group, a global technology research and advisory firm headquartered in the US . “In India … the difficult part is figuring out the infrastructure to make home deliveries viable,” Cunnane wrote on ARC’s Logistics Viewpoints blog. "Trucks have a difficult time navigating the crowded streets and the postal service is notoriously slow. One new option in India is the use of couriers to deliver goods purchased from Flipkart, Snapdeal and Amazon India.”

OPTIMIZING EFFICIENCY

Cost is a key concern for retailers and consumers, especially when there is a lot of distance to cover. “The last mile on average makes up nearly 30% of transportation costs, and it is very hard to bring down,” said Brittain Ladd, a supply chain consultant.

Retailers are responding to the challenges with flexible distribution models that can shorten the last mile and improve efficiency while enhancing the consumer experience. Local warehouses, combined with innovative technologies, are helping to optimize journey planning, while a range of purchasing and collection choices offer convenient options for consumers.

For example, Peapod, an online grocery delivery service that operates in 24 regions of the US Midwest and East Coast, operates three different warehouse formats depending on local market size and density. Consumers can purchase their goods at virtual grocery stores in locations including commuter rail stations. As well as delivering to homes and businesses, Peapod also provides pick-up points in convenient locations.

DIGITIZED DISTRIBUTION

Retail organizations are using innovative technology to optimize the last mile by combining incisive planning with the flexibility to respond quickly to changing demands. One supermarket chain in India, for example, offers free delivery to consumers for orders costing more than a certain amount, with delivery service outsourced to a third-party courier. By dedicating a floor at one of its distribution centers as a logistics center, the company has been able to double its product lines. It also has implemented an e-commerce system to enable real-time inventory status and efficient pickup, helping to ensure that both the availability and delivery of goods will meet consumers’ expectations.

Waitrose, the food division of UK retailer and cooperative of the John Lewis Partnership, implemented digital supply chain planning and optimization software to enable centralized transport planning, dispatch and yard management across its distribution centers and branches. In addition, a workforce planning solution allows branches to interact with the central system and allocate man hours so planners can try different scenarios and ‘what-if’ proposals to maximize opportunities at the local level.

GETTING THE MESSAGE

The last mile of transit can be subject to unexpected and unavoidable delays that cause frustration for consumers. While vehicle or driver technology provides a cost-effective way to generate GPS-enabled messages when a truck is within a set distance of its destination, this is not always put to best use.

“All too often, customers can track their package to the delivery depot, but they lose sight of it during its journey from the depot to the delivery address,” said Nizam Sacranie, owner of a chain of discount stores in Leicestershire, UK, who is exploring home delivery options for his business. “Communicating with customers during that last stage of the journey will not only keep them informed about any delays; it will also mean they’re less likely to nip out or do something that means they don’t hear the doorbell when their delivery arrives.”

In today’s digitally connected world, retailers have increased opportunities to add value through communications in the last mile of the supply chain. RFID labels can enable the packages themselves to communicate through Wi-Fi and mobile towers, and an omni-channel approach can direct communication to the specific channel favored by each consumer.

“THE LAST MILE ON AVERAGE MAKES UP NEARLY 30% OF TRANSPORTATION COSTS.”

BRITTAIN LADD
SUPPLY CHAIN CONSULTANT

For example, companies like UPS in the US and DHL in Germany enable customers to change their minds about delivery times and locations while packages are in transit, online or with a mobile app. “Consumers don’t want rigid delivery times and options,” according to the report “Omni-channel Logistics”, jointly published by German logistics company DHL Consumer Solutions & Innovation and IDC Manufacturing Insights, a global IT research provider headquartered in the US. “Consumers also demand flexibility in the communication channels beyond the web and mobile apps. They demand the same logistics access and interaction via WhatsApp, Vchat and other unstructured channels. For logistics providers and retailers, the challenge is to create and maintain a single view of all customer service channels to enable seamless and streamlined communication.”

Ultimately, the last mile of distribution encompasses much more than a distance for goods to travel. As competition intensifies, new distribution models and innovative technologies are enabling greater insight and planning to optimize fulfillment, staffing and transportation. The ideal solution will differ for each retailer and market, but those that get it right will deliver true value into consumers’ hands. ◆

Closing the digital divide

Low-Earth-orbit satellites aim to beam affordable internet everywhere

Charles Wallace

5 min read

The lack of affordable, readily available internet access in remote and low-income areas of the globe has been blamed for limiting economic opportunity in the developing world. Using a variety of technologies – from low-altitude satellites to balloons – startup companies and online leaders are racing to change that equation.

According to a recent study by the World Bank, only 19.2% of the people in sub-Saharan Africa and 16.6% of residents of South Asia have internet access, compared with nearly 80% of those in Europe. This dramatic gap is often referred to as the “Digital Divide,” putting developing countries at a distinct disadvantage for economic growth, social mobility and citizen engagement.

Now, however, thanks to advances in technology and the efforts of entrepreneurial risk takers, a number of firms are racing to launch advanced satellite systems that promise to bring broadband internet access – even multichannel video streaming – to parts of the world that still lack such basics as around-the-clock electricity and landline telephones.

One such company is OneWeb of Jersey, one of the English Channel Islands off the coast of France. Its founder is an American entrepreneur named Greg Wyler, a former Google executive.

OneWeb CEO Matthew O’Connell said the firm has raised $500 million from investors that include Richard Branson’s Virgin Group, chipmaker Qualcomm, Airbus Group, satellite data providers Hughes Network Systems and Intelsat, Coca-Cola, mobile phone provider Bharti Enterprises of India and Mexico’s Totalplay, a Grupo Salinas telecommunications company.

OneWeb plans to ring the Earth with a chain of 648 small satellites that can transmit to simple terminals anywhere on the planet. It has already purchased portions of the radio spectrum for the satellites from the British government; launch of the satellites is planned for 2018 or 2019.

"WE ARE AIMING AT PEOPLE IN AREAS OF THE WORLD THAT ARE NOW NOT WELL SERVED."

MATT O’CONNELL
ONEWEB CEO, SPEAKING ABOUT THE COMPANY’S PLANS FOR INTERNET SERVICE

Unlike conventional satellites that sit at a distance of 35,786 kilometers (22,225 miles) from the Earth and are locked in one position – called a geosynchronous orbit – these 150-kilogram (330-pound) satellites will be smaller, low-Earth-orbit (LEO) units that fly only about 550 miles (885 kilometers) above the Earth. They will move in continuous orbits, cutting signal response times and costs.

“People are very excited about the possibility of having satellites that can give you global coverage, rather than just partial coverage,” O’Connell said, adding that prototypes of the small satellites are currently being designed and built by Airbus Defence and Space in Toulouse, France. “Because they are low-Earth orbiting, they’ll have a faster response time than what’s available now.”

O’Connell said the initial sales push will be aimed at small businesses, such as drink stands in Africa. By installing
a small terminal, the business can offer a Wi-Fi access point to attract customers. When the satellites are fully deployed, consumers also will have access to competitively priced internet anywhere in the world. “We’re not going head to head in built-up urban markets, but we are aiming at people in areas of the world that are now not well served,” O’Connell said.

INTERNET FOR ALL, BUT IS IT EQUAL?

Another participant in this race is a Hong Kong-based firm called CMMB Vision, which has been operating commercially since the 2008 Beijing Olympics. According the Charles Wong, chairman and CEO, CMMB Vision has contracted with US aircraft firm Boeing to launch an advanced Silkwave-1 satellite in late 2017. The Silkwave-1, to be acquired by New York Broadband LLC (NYBB) and operated by CMMB Vision, will cover China, India and the Southeast Asia countries collectively known as “One Belt-One Road.”
 
Hui Liu, chief technology officer at CMMB Vision, said the satellite will broadcast directly to cellphones and terminals in cars, providing audio, video and internet services at little or no cost, using technology similar to satellite radio services in the US and Europe. “The difference is this satellite is more powerful and the technology is more versatile so you can send not only hundreds of audio channels, but video streams and data like newspapers,” Liu said.

Because the company is broadcasting directly to consumers, Liu said, CMMB Vision has applied for regulatory approval from China’s State Administration of Art, Film and Television (SARFT), as well as the Ministry of Industry and Information Technology in Beijing. He said CMMB Vision will partner with mobile phone companies on the ground in each country to liaise directly with consumers.

Some big firms have also joined the race. Facebook CEO Mark Zuckerberg, for example, announced in October 2015 that the social media site is partnering with satellite operator Eutelsat to launch AMOS-6, a geosynchronous satellite that will beam the internet to large parts of east, west and southern Africa as part of an initiative Zuckerberg has dubbed Internet.org.

The program already uses terrestrial cellphone technology to provide a simple internet package called Free Basics in 37 countries. This service has been criticized in India and elsewhere for limiting users to restricted packages of internet access. Critics say such limits violate the principle of net neutrality, under which all internet content should be treated equally. While Facebook says it is investigating alternative offerings, India’s Telecom Regulatory Authority banned Facebook’s service in February 2016 for cellphone users throughout the country.

Project Loon balloon, on display at the Airforce Museum in Christchurch, New Zealand, after Google revealed plans to send the balloons to the edge of space with hopes of bringing the internet to the two-thirds of the planet that currently lacks web access. (Image © AFP PHOTO / MARTY MELVILLE)

Google has also jumped into the battle to bring the internet to people at the “bottom of the pyramid.” One Google plan involves retransmitting internet signals via huge balloons. Known as “Project Loon” because even the designers thought it was a crazy idea, albeit one that just might work, the balloons were deployed in the stratosphere above Sri Lanka in February 2016 and are being tested at sites in New Zealand, California and northeast Brazil. The balloons will deliver internet access to smartphones using standard wireless technology, in cooperation with existing carriers.

16.6%

According to the World Bank, only 16.6% of the residents of South Asia and 19.2% of people in sub-Saharan Africa have internet access, compared with nearly 80% of those in Europe.

A less loony technical option may be Google’s 2014, $500 million purchase of Skybox Imaging. Skybox, since rebranded as Terra Bella, has developed small, cube-shaped satellites for low-Earth orbits that are designed to improve on existing satellites for taking pictures of the Earth’s surface everywhere and at lower cost. Google said when it announced Skybox’s purchase that it also planned to use the new satellites to help connect developing countries with the internet, but didn’t say how.

What will all of this internet access achieve in countries where it has been non-existent or hard to come by? Eun-A Park, an assistant professor of communications at the University of New Haven in Connecticut, said that “governments will have to become more transparent if their citizens gain more access to information. At least, they can’t continue to misinform their citizens about issues they can easily verify from outside sources.”

TRULY UBIQUITOUS INFORMATION

Visionary science-fiction writer Arthur C. Clarke proposed using satellites for radio and television in 1945, an idea that has since become a reality. “We can now send instruments of all kinds into the ionosphere,” he wrote, “and by transmitting their readings back to ground stations obtain information which could not possibly be learned in any other way.” Little did even he know then that satellites would one day be used to help billions of people in the developing world cross the Digital Divide. ◆

Take a closer look at Google’s Project Loon :
http://bit.ly/ProjectLoonVideo

The future of work

With automation poised to put millions out of work, economists debate if growth can create enough new ones

Charles Wallace

7 min read

Since the 1970s, automation has eliminated the jobs of millions of bank tellers, retail cashiers, travel agents, airline front-desk workers and manufacturing employees. With the jobs of truck drivers, airline pilots and even medical doctors now at risk as well, it sometimes feels as if every human job except those of computer coders is destined to disappear. Compass examines the jobs at risk and the forces at work.

A pair of unusual trucks plies the highways in the US state of Nevada and along the German autobahn near Stuttgart. Although they look similar to most 18-wheel rigs on the road today, these trucks have a unique driver in the cab: an autonomous, computer-guided system dubbed Highway Pilot that steers the trucks without help from the human in the front seat.

So far, these ultramodern trucks made by Germany’s Daimler Trucks are only test vehicles; the humans are there in case anything goes wrong. Most highway regulations still only permit fully autonomous vehicles on the open road with humans near the controls. Once enabling legislation is passed, however, Daimler expects trucks based on these prototypes to be operational by the end of the decade, Stuttgart-based Daimler spokeswoman Uta Leitner said.

Repercussions for the future employment prospects of the approximately 7 million truck drivers now working in the US and Europe remains an open question: Will self-driving vehicles cause these jobs to disappear, following in the wake of elevator operators replaced by push buttons, bank tellers displaced by ATM machines and travel agents made redundant by online booking services? And what of other jobs that can be done by powerful computer algorithms, from medical diagnosis to automated coordination of rooftop power generating stations?

Germany's Daimler Trucks is testing two self-driving trucks. The person in the cab is there only as a precaution, to comply with current legal requirements. (Image © Daimler Trucks)

“If your job is repetitive, if it doesn’t require creative thinking, if you can write it out as a process, it’s at risk of being taken over by a bot or by a robot,” said Jacob Morgan, author of The Future of Work. “There’s a bit of fear there, and should be, so employees have to think about retooling themselves.”

INDUSTRIAL REVOLUTION 4.0

Since the Industrial Revolution began replacing workers with machines in the late 18th century, technology has been changing the nature of work. For every painful job loss, however, the economy generally created one or more new jobs in more advanced industries. Displaced workers had to retrain for the new jobs, but jobs still existed for those willing to learn new skills.

Now, however, due to a confluence of cutting-edge technologies – artificial intelligence, robots, automated big data analysis, the Internet of Things, nanotechnology and 3D printing, among others – many experts believe the world is at an important inflection point that may change work so dramatically it will become virtually unrecognizable. For example, in the not-too-distant future, there may not be any need to move goods at all, even with self-driving trucks; everyone will make their own products at home with downloaded 3D models produced on 3D printers – perhaps also displacing all of those factory robots that previously displaced their human counterparts.

Many believe the dystopian model is most likely. For example, a recent study of human resources executives from major multinational corporations worldwide, unveiled at the 2016 World Economic Forum (WEF) in Davos, Switzerland, predicted 7.1 million job losses in the next five years, two-thirds of them in office and administrative jobs eliminated by automation. Saying that the world is entering a Fourth Industrial Revolution – steam power, electricity and computers accounted for the first three – the study predicted that technological improvements and economic growth will create only 2 million new jobs – a net loss of more than 5 million jobs in five years.

7.1 MILLION

The number of jobs predicted to be eliminated in the next five years, according to a report given at the 2016 World Economic Forum in Davos, Switzerland. Economic growth, the report projects, will create only 2 million new jobs, a net loss of more than 5 million jobs in five years.

“The global workforce is expected by our respondents to experience considerable churn between job families and functions, with administrative and routine office functions at risk of being decimated” and strong growth in computers, mathematics, architecture and engineering, according to the WEF study, which surveyed human resources executives at 371 of the world’s largest companies.

Jerry Kaplan, who founded GO Corp, a pioneering tablet computer company, in 1987, and later studied the impact of technology on employment, worries about the trends he sees. Kaplan predicts that, while this round of technological change likely will yield a number of long-term economic benefits, the short-term impact may be brutal.

“Recent advances in robots, machine learning and computers are enabling a new generation of systems that rival or exceed human capabilities,” said Kaplan, author of Humans Need Not Apply: A Guide to Wealth and Work in the Age of Artificial Intelligence. “There are two reasons: the rate of innovation in automation is increasing, and there have been some significant advances in artificial intelligence.” While society will benefit from many of these changes, “we may be in for a protracted period of social turmoil.” 

PROFESSIONALS IN PERIL

As an example of the kind of sea change likely in the next few years, Kaplan cites medical doctors and airline pilots, professionals whom most people assume are not easily replaceable. But Kaplan said that robots are already performing some types of delicate surgery and that algorithms are better at diagnosing many diseases than humans, while automation aboard airplanes has a far better safety record than human pilots.

Martin Haegele, head of robot and assistive systems at the Fraunhofer Institute for Manufacturing, Engineering and Automation in Stuttgart, Germany, said he expects robots in workplaces to become even smarter and more flexible than the current models, which today are mostly limited to performing one repetitive task on factory floors. Their successors will have bodies that look like the upper torso of a human with arms. These robots will work collaboratively with humans, who can train each robot by guiding it through its tasks – no programming required.

Technological changes are also likely to lead to what author Morgan refers to as “the freelancer economy” and that others call “the Uber economy,” named for the freelance car service, which has prompted widespread protests by cab drivers in several cities, reminiscent of the Luddite protests by 19th century English textile workers displaced by automated looms. Due to innovations such as smartphones and the internet, Morgan said, freelancers can work as much or as little as they like, without being constrained to an office. As a result, he predicts that companies will replace as much as half their workforce with freelance workers whose output can be easily monitored and rewarded, lowering overhead – and eliminating the negative publicity of announcing layoffs in down cycles.

Humans are disappearing from port docks at the Port of Long Beach in California as automated cranes pluck cargo from ship holds and place it on vehicles guided by magnets in the pavement. The European ports at Rotterdam and Hamburg are using similar technologies. (Image © Tim Rue / Bloomberg via Getty Images)

THE OPTIMIST VIEW

Not everyone shares a gloomy view of the future employment picture, however. Guy Michaels, an economist at the London School of Economics, published a study in 2015 that looked at employment in 14 industries, mostly in the manufacturing sector, that had introduced robots. He found that while the robots caused some job losses, new employment in those industries mostly balanced out the layoffs, though it was impossible to tell if displaced individuals fared better or worse economically. The companies were located in 17 countries.

“There will be people who are displaced from their jobs, and not all of them will find equivalent jobs,” Michaels said. “That doesn’t necessarily mean on a net basis there will be job losses. If consumers are better off, they can spend more. Firms can design other products and can take advantage of automation. We see rising productivity and wages, but not much change in terms of overall employment.”

The advance of technology, Michaels said, affects job categories differently. For example, the industry known as information communication technologies – which includes the mobile web – tend to benefit college-educated workers without seriously impacting high school graduates; instead, significant job losses hit those in a middle category: people with some university education, but not a degree. Robots, on the other hand, mostly replace low-skilled, high school-educated workers, he said.

“IF YOUR JOB IS REPETITIVE, IF IT DOESN’T REQUIRE CREATIVE THINKING, IF YOU CAN WRITE IT OUT AS A PROCESS, IT’S AT RISK OF BEING TAKEN OVER BY A BOT OR BY A ROBOT.”

JACOB MORGAN
AUTHOR, THE FUTURE OF WORK

While some economists say a slowdown in innovation is likely, minimizing the risk of wholesale job displacements, others – including Massachusetts Institute of Technology (MIT) economists Erik Brynjolfsson and Andrew McAfee – argue that the plummeting costs of digital devices, coupled with the increased availability of analyzable big data from millions of smart, connected devices, means that innovation is expanding at a “rapid exponential pace,” faster than anything humanity has experienced in the first three Industrial Revolutions.

They note, for example, that automotive experts in the year 2004 expressed doubt that self-driving cars would ever be technically possible. Only a decade later, however, Google had combined existing technology, including satellite maps of roads, sensors on cars and massive computational power, to produce a working autonomous vehicle. Subsequently, in a one-week period in January 2016, General Motors announced a US$500 million (€439 million) investment in car-sharing service Lyft and plans to build a fleet of self-driving cars, while US President Barack Obama’s administration announced that it would invest US$4 billion (€3.5 billion) over 10 years to ensure that these autonomous vehicles are safe when they reach the highway.

THE ECONOMICS OF EFFICIENCY

Brynjolfsson and McAfee note that while the overall economies of developed countries have been growing at a steady pace, the growth has not applied equally to all workers. Eastman Kodak, which once employed 150,000 people, went bankrupt because demand for film cameras collapsed. Instagram, born from the digital camera revolution, moves billions of digital photographs a year, but employs only a few hundred people.

Going forward, the employees who will most enjoy the benefits of digital productivity increases will be technically trained professionals – but no one is certain how many displaced workers will be able to acquire the skills to transition into these jobs, or who will pay to retrain them.

Despite some dire predictions, most economists agree that humans will always be needed to design, program and oversee robots and other forms of automation. Even if the number of low-skilled jobs declines, demand for highly skilled workers is likely to soar in the years ahead. Whether these jobs will be sufficient to replace those lost to automation, however, is likely to be hotly debated for many years to come.

“I’m quite optimistic about the future of jobs,” Ellyn Shook, chief leadership and human resources officer at consulting firm Accenture, said in a recent webcast about the future of work. “It’s all about digital disruption. But humans are at the heart of digital disruption. The behaviors that humans have around emotions and creativity are not things that are going to be replaced by machines.”

Related reading from The New York Times: If robots take all the jobs: might humans be paid not to work?
http://bit.ly/PaidNotToWork
 
See why technology will eliminate 45% of today’s jobs
http://bit.ly/JobKillingTech

Braid the new world

Boost your organization into the digital era

Sean Dudley

6 min read

Today’s world is hyperconnected and constantly evolving. Yet many organizations retain hierarchical models that limit interconnections. Theano Advisors advocates a new approach that uses ‘braids’ to empower teams and individuals through information and data exchange, shared contributions to meaningful purposes and real-time collaboration. 

Driving organizations through cycles of strategic metamorphosis and reinvention, dealing with complexity, intelligently managing operations while helping executives and their organizations to flourish have long been the hallmarks of Michel Zarka’s mission.

Zarka is the CEO and founder of Theano Advisors, a management consultancy headquartered in Paris that provides strategic and operational support to CEOs and directors of large organizations. Over his years of practice, Zarka has found that traditional, hierarchical business models often stunt a company’s growth potential, limiting its ability to be progressive and take advantage of today’s pervasive and game-changing digital opportunities.

To help combat this, Zarka and his colleagues, Isabella Raugel and Elena Kochanovskaya, developed a new approach to transforming businesses that they refer to as “braided organizations,” a concept designed to optimize interaction patterns among people and teams within and beyond an organization’s boundaries. When combined with digital technologies, braids (a term borrowed from Theory of Braids, first described in 1925 by Austrian mathematician Emil Artin) enable the exchange of real-time information, rich discussions and development of innovative solutions, while connecting people’s motivations and interests and their business objectives to purposes in line with a company’s mission. These interwoven interactions among contributors of diverse hierarchical and generational backgrounds unite competencies and talent and give adopters a competitive edge.

NEW THINKING FOR A NEW SYSTEM

“The majority of CEOs we work with are facing significant complexity challenges,” Zarka said. “Although they want their organizations to become more agile and bring solutions to market faster, the classical reaction is an attempt to control complexity by creating more complexity, via additional processes and layers.” In today’s fast-moving, rapidly evolving world, however, these layers and processes reduce reaction times and slow an organization’s metabolism, Zarka said, putting successful organizations at risk of being disrupted by more nimble and faster-moving competitors.

MICHEL ZARKA, CEO and Founder, Theano Advisors (Image © Theano Advisors) 

The answer to these challenges, Zarka believes, lies in creating and enabling smarter interconnections between people with the aim of “connecting the unconnected” in ways that unleash new pockets of value. Theano Advisors advocates an operational and cultural shift within companies, which places hierarchical braiding and empowered teams at the heart of the organization’s growth and value-creation engine.

“It’s a shift where the fundamental idea that productivity and value are best reached through a control-and-command system is reversed,” he said. “CEOs often think that when you set targets, the organization will execute accordingly and that the tasks will eliminate all of the ‘clashes.’ But this is false.”

What is needed instead, Zarka said, is an organization with an auto-adaptive system and ways of working that can deal with clashes fast enough, before they become business critical. “It’s not a question of top-down target setting and deployment, but rather connecting people in ways that enable them to collaboratively address opportunities and resolve issues in real time, arbitrating in the best interest of the organization.”

THE BRAIDED SOLUTION

With its unique methodology for transforming traditional companies into braided organizations ready for the new digital era, Theano Advisors aims to revolutionize the way CEOs think about their business, collaboration, idea generation and value-creation ecosystem. The braided organizational approach, Zarka said, allows companies to rebalance key competencies and workflows, in accordance with the “ultimate real-time information.”

“Companies today face a pressure to answer many different questions and challenges, instantaneously,” Zarka said. “The braided approach enables organizations to effectively cope with its ’boundaryless environments and markets’ that are no longer limited by space or time constraints.

“Succeeding in such environments requires an interconnected system of contributions that allows for real-time reactions and inputs from distributed networks of contributors and a new type of leader who has confidence that such networks will provide relevant insights to help make better decisions. Such a braided-organizational system creates more resilient companies where knowledge is distributed and information shared by ‘many-to-many’ players, rather than centralized and retained by few people at the very top.

”This reimagined organizational model, which is more in sync with today’s in-flux market dynamics, will naturally alter how leadership works. Zarka believes that an organization that accepts the ideas of braids also needs to recognize that leadership should be primarily based on influence and peer recognition, not hierarchy."

Leaders need to recognize that, for a given purpose, they are not the leader but one contributor among others working collectively to make the best decisions,” Zarka said. “It’s a dramatic change that may seem difficult to implement, but accepting the braided model doesn’t mean that everybody in the organization brings the same quality of inputs or that individual expertise vanishes. On the contrary, braids boost the existing expertise hidden within the silos of traditional hierarchies and functions – making it more open, accessible and plural, significantly amplifying its value.”

STARTING TO BRAID

If a company believes that adopting braided principles may suit its ambitions, how should a CEO begin the conversion to this new organizational and leadership model?

Zarka suggests reviewing the current level of interactions between people on the inside and outside, exploring in depth the ways the organization is braided both internally and with its external ecosystem. “Ask yourself about the minimum braiding level that would make your company more efficient,” he said. “Are you at the right level?”

Zarka proposes these additional steps to ensure success:
• Design and launch small-scale but meaningful experiences to enable new ways of working.
• Build communities reinforce data sharing, allow for affinity- and purpose-based connections among people.
• Boost these interactions via robust digital tools and platforms to scale up the level of connectivity and enable better visibility into the type of value (solutions, ideas, decisions) being generated and its core sources.
• Use this insight strategically, and systematically curate the braiding across your organization, optimizing the impact of those braids that generate the most powerful value for your company and its ecosystem.

“This metamorphosis into a braided organization will not be achieved in a single day,” Zarka said. “A CEO should not change the entire organization at once. But by introducing the braids and new ways of working through purpose-driven experiences and then expanding progressively, we are convinced that visionary CEOs will chart their organizations’ path to success.” ◆

MICHEL LANDEL, CEO, Sodexo (Image © Sodexo) 



“THE BRAIDED APPROACH ALLOWS US TO LEVERAGE OUR EXPERTISE, KNOWLEDGE, EXPERIENCE AND INTELLIGENCE FOR THE BENEFIT OF OUR CLIENTS AND CUSTOMERS.” 

MICHEL LANDEL
CEO, SODEXO


THIERRY BOLLORÉ, Chief Competitive Officer, Renault-Nissan (Image © Renault-Nissan) 



“AS INFORMATION CAN BE EASILY SHARED BY EVERYONE, THE CAPACITY TO GAIN THE RELEVANT INPUT FROM DIFFERENT HIERARCHICAL LEVELS, FROM THE VERY TOP TO THE VERY OPERATIONAL IN THE FIELD, IS KEY TO ENABLING THE RIGHT, COLLECTIVE VISION.”

THIERRY BOLLORÉ
CHIEF COMPETITIVE OFFICER, RENAULT-NISSAN


LAURENT BLANCHARD, Executive Vice President of Global Field Operations, Dassault Systèmes 

ENABLING BRAIDS 

After discovering their mutual commitment to enabling more empowered and agile organizations, Dassault Systèmes and Theano Advisors have partnered to help advance the concept of the braided organization.

“Dassault Systèmes’ 3DEXPERIENCE platform really started as an enabler of collaboration among peers,” said Laurent Blanchard, executive vice presidentof global field operations at Dassault Systèmes. “But we didn’t have the capability to offer change management that would allow organizational transformation. Similarly, Theano Advisors, having developed the braided approach, didn’t have a platform to package their concept on. We saw early on that the 3DEXPERIENCE platform fit perfectly with braiding.

”One advantage of the 3DEXPERIENCE platform is its ability to provide a collaborative environment with both social and business aspects.

“In a braided organization, you need to link the social and business spaces,” Blanchard said. “You want to enable creativity by offering a dynamic environment whereby your employeescan easily connect, share ideas and make recommendations. The ability to link this with a formal process on the 3DEXPERIENCE platform is really unique on the market.”

The digital enterprise drives many new ideas in modern business. When seeking to embrace them, however, many CEOs face resistance within their own companies.

“The 3DEXPERIENCE platform offers an insurance that every member of the braid sees the same information, which in turn encourages collaboration and leads to innovation,” Blanchard said. The platform supports management with structured data; subsequently, data can easily be searched, tagged, rebuilt according to context and extracted by braid members.

“Innovation should not be a top-down concept, led by CEOs and management,” Blanchard said. “It should be a bottom-up approach, involving all parts of the organization as well as the consumers. Knowledge and ideas live everywhere, and organizations today must be able to take advantage of them from every direction.

”Braiding gives organizations the agility to change the way they work, and the 3DEXPERIENCE platform enables and provides visibility for efficient operations, even as authority becomes distributed. The combination of the braided approach and the 3DEXPERIENCE platform, Blanchard said, can help to transform the way people, talent and skills are managed.

“It’s not only about a person’s expertise, but their capability to connect with others and contribute,” he said. “This will make people far more accountable for their job, because it’s up to them to go outside their comfort zone and develop themselves by getting in touch with other people. It gives people more responsibility for their own success, which is essentially the direction society is taking.” 

A tale of two cities

Detroit and Munich: similar cities with very different challenges

Nick Lerner

10 min read

As city officials prepare to gather July 10-14 in Singapore for the 2016 World Cities Summit, Compass compares two cities – Detroit and Munich – where the automotive industry is paramount but each city’s future holds very different challenges. Still, both cities see realistic 3D modeling as an important piece of planning their evolutions.

Detroit, Michigan, and Munich, Germany, have much in common. They share similar latitudes (48°13’N for Munich, 48°13’N for Detroit). Both are graced with water (the River Isar for Munich, the Detroit River linking the St. Clair and Erie lakes for Detroit). And, since the turn of the 20th century, automobiles have dominated both cities’ economies.

Detroit took off in 1903, when Henry Ford founded Ford Motor Company. Ford was quickly followed by the Dodge Brothers, Packard and Walter Chrysler, leading to Detroit’s nickname as “The Motor City.” In Munich, BMW is the largest employer with 41,000 workers, triple those employed by the city’s second largest company.

Economically, however, it is difficult to imagine two cities, both located in advanced western nations, which are more dissimilar.

With 3% unemployment and per capita income approaching €27,000 in 2007 (US$30,663), Munich has the highest standard of living in Germany and the fourth highest worldwide, according to the 2015 Mercer Survey; its population has grown 20% in the past 10 years, to a total of more than 1.5 million. Given its success, Munich’s biggest challenge is how to continue to grow in just 310 square kilometers (120 square miles) of space without sacrificing its environment or succumbing to traffic gridlock.

                                                                             The Park Avenue Building in downtown Detroit is one                                                                                   of more than 80,000 properties that had been                                                                                          abandoned before the city began                                                                               its comeback. (Image © AFP Photo / Maria Oberman)

Detroit, meanwhile, battered by repeated setbacks in the US auto industry and a mass exodus to the suburbs, has lost 60% of its population, dropping from a high of 1.8 million in the 1950 census to slightly less than 700,000 today. Its unemployment rate is 14.5%, and its 2010 per capita income was US$14,118 (€12,400), less than half of Munich’s. At its worst, more than 80,000 buildings were abandoned, including 20% of the city’s housing. With its employment and tax base eroded, Detroit – US$18.5 billion in debt – filed for bankruptcy in December 2013.

With such divergent economic pictures, it would be easy to conclude that Detroit and Munich won’t find any common solutions to their challenges at the World City Summit in Singapore this July. In fact, however, both cities will be taking a hard look at the host city’s “Virtual Singapore” program (http://bit.ly/ VirtualSingapore). That effort, currently in development, is working to feed the data automatically generated by its citizens’ smartphone movements into a dynamic 3D virtual model that grows richer day by day. The result is a real-time, ever-evolving simulation of Singapore that will help the bustling city-state plan its future while delivering a high quality of interaction for its citizens.

The following is a look at the challenges of both Detroit and Munich, and how they might be addressed by the same technology at use in Singapore.

DETROIT’S ‘MAKER’ ECONOMY

In the wake of its urban downturn, Detroit is rising again with a maker culture. “Detroit is the city that made America, and it’s not giving up,” said Jacques Panis, president of Shinola, a Detroit-based company that Panis describes as “a job-creation vehicle.”

                                                                           MAURICE COX, Detroit Planning Director

Shinola, one of a host of young companies flocking to help rebuild downtown Detroit, produces a range of high-quality watches, bicycles, leather goods and journals – all proudly branded “Built in Detroit.” Though small, with just 500 employees, Shinola is only about 200 employees short of making Detroit’s list of Top 25 employers.

Panis describes his main challenge as bringing large numbers of new staff to high levels of skill in complex manufacturing into the factory to help us train our people and set up operations to Swiss standards,” he said. “We are all in it together: innovating, understanding and ‘making’ properly.”

“PLACES THAT HAVE PREVIOUSLY NOT RECEIVED ATTENTION OR RESOURCES ARE GETTING THEM NOW. OPPORTUNITIES TO INNOVATE ARE HIDING IN PLAIN SIGHT.”

MAURICE COX
DETROIT PLANNING DIRECTOR

Shinola does not take any tax incentives, Panis said, but finds the city government’s attitude refreshing. “Because of its history, the city has everything you need to run a global manufacturing business, including an airport, port and railway, and a city government that is prepared to embrace innovative concepts and that offers new enterprises a genuine welcome,” he said. “They have time to listen and they want to help create opportunities. This city is what opportunity looks like.”

A SPRAWLING CHALLENGE

Such sentiments are music to the ears of Maurice Cox, Detroit’s planning director, who was appointed in 2015 to draw people and investment to a city best known for cars, Motown music and the largest municipal bankruptcy in US history (Detroit emerged from bankruptcy in December 2014 after just a year of restructuring).

As planning director in an economically distressed region, Cox’s job isn’t just planning; he also works as an enabler of development and one of the city’s leading cheerleaders. In 2013-2014 alone, US$5.2 billion (€4.5 billion) in new investment flowed into the city. The population of key areas, including downtown and midtown Detroit and nearby neighborhoods, has begun to grow; overall, population decline has slowed from 2.5% annually to about 1%. Cox is eager to keep turning that tide.

                                                            JACQUES PANIS, President of Shinola

“Detroit has the square-mile footprint of Manhattan, Boston and San Francisco put together, but is sparsely populated in many areas,” Cox said. “Development potential is therefore enormous. We are currently mapping the city to define development parcels for innovative startups.”

In this “supersize city,” some areas retain a genuinely rural feel. “We have to think of new urban forms and define uses for this land to make linked islands of enterprise throughout the city,” Cox said. “These would be places where new businesses could emerge, grow and network in different neighborhoods rather than being located downtown. It’s a new city paradigm. Through investment, we are creating engines of growth, cultural anchors and strategic employment opportunities.”

To keep Detroit growing, housing is another important focus. Detroit is holding competitions for developers and architects to create family- and enterprise-friendly medium-density housing and other pedestrian-scale neighborhood concepts. “The future of Detroit is in its neighborhoods, and at a village scale,” Cox said. “Places that have previously not received attention or resources are getting them now. Opportunities to innovate are hiding in plain sight.”

“THIS CITY IS WHAT OPPORTUNITY LOOKS LIKE.”

JACQUES PANIS
PRESIDENT OF SHINOLA, ON WHY THE COMPANY RELOCATED TO DETROIT

ROCK OF CHANGES

One major contributor to Detroit’s renaissance is Rock Ventures, parent of Quicken Loans. Quicken, one of the world’s largest mortgage lenders, was founded by Dan Gilbert, a Detroit native who in 2010 consolidated Quicken Loans’ 4,600 employees in downtown Detroit. Quicken is now the city’s third largest employer, outranked only by a major medical center and the city itself.

Bedrock Detroit, another of the Rock Ventures companies, has revitalized entire blocks of abandoned Detroit real estate into attractive spaces for young, up-and-coming companies. Together, Rock and Bedrock have invested US$2.2 billion (€1.9 billion) in Detroit, purchased 14 million square feet (1.3 million square meters) of properties and created 8,000 new jobs, including architects, property managers, maintenance staff, mortgage bankers, and IT, sales and marketing professionals.

Steve Rosenthal, principal of Bedrock and president of Rock Companies, is leading all aspects of revitalizing a four-block, 8.4-acre section of Detroit’s historic Brush Park neighborhood north of downtown. Since 2011, the company has also purchased 90 buildings for redevelopment and has a host of other major building projects underway in the city. Rosenthal describes it as “the biggest development in Detroit for 30 years.”

MUNICH ON THE MOVE

As Detroit claws its way back from the brink of extinction, Munich is grappling with how to manage too much success – success that will only increase the pressure on a city of only 310 square kilometers (120 square miles) with a population of 1.5 million people that has grown 20% in the past decade. With an unemployment rate of only 3% and one of the highest per capita income levels in Europe, Munich also boasts Germany’s highest cost of living.

BMW, which employs 41,000 people in Munich, dominates the city center with its BMW World museum (lower left), high-rise corporate tower (upper right), and manufacturing plants (center). (Image © Ulrich Baumgarten / Getty Images)

And now premium automobile maker BMW, already the city’s largest employer by far, is consolidating its research activities in the city center, with plans to grow its Munich employment by 15,000. The research and innovation center, known as FIZ (Forschungs und Innovationszentrum), will transform an abandoned military facility into a 2 million-square-meter (21 million-square-foot) campus focused on creating the transportation innovations of tomorrow.

“FIZ will be our main R&D hub for the next 30 years of technical and environmental challenges,” said Markus Baumgartner, BMW FIZ Future Program lead. “Previously, the site for FIZ was closed to the public. In the future, the site will be more accessible; in some parts the only boundaries will be the buildings themselves. To help spark ideas, FIZ is designed to facilitate as much personal and chance meeting as possible. All around will be public space and a 5-hectare public garden.”

“FIZ WILL BE OUR MAIN R&D HUB FOR THE NEXT 30 YEARS OF TECHNICAL AND ENVIRONMENTAL CHALLENGES.”

MARKUS BAUMGARTNER
FIZ FUTURE PROGRAM LEAD, BMW

Communication has been a major focus for BMW as it pursues the project. “Early and continuous communication is key to defining a common purpose, gaining strong backing and accelerated momentum for change,” Baumgartner said. “We worked with our neighbors and the city to define the aesthetics, function and integration of FIZ into the metropolitan fabric and help make improvements for everyone. These include better bus, tube, rail and tram links as well as improvements to roads and footways.”

                                                                   MARKUS BAUMGARTNER, FIZ Future Program Lead

GROWTH WITHIN LIMITS

Volker Brambach, a planner at Munich’s Department of Urban Planning and Construction, leads the city’s efforts to weave FIZ into Munich’s urban center. “Mediating in consultation with many interest groups, we sought to produce a master plan that defines the structures and future development so that everybody wins,” he said. “Our main goal is to strengthen and improve local spaces, make them look good and have them as green as possible.”

Accommodating new people is a priority in the rapidly growing city. “Currently, BMW employs 41,000 people in Munich,” Brambach said. “FIZ will increase that number by 15,000 over coming decades. This creates a need for more housing. The likelihood is for increased density, as land is in short supply.”

Like BMW, the city sees communication as a key tool in understanding and overcoming objections. “We have to deal with very complex sets of issues while clearly communicating our plans,” Brambach said. “This has helped create a very positive feeling about FIZ, because almost everyone has got what they wanted. Even though growing traffic load will be an everlasting problem that has to be solved, very few people complained."

In redeveloping an abandoned military complex to create FIZ, a 2 million-square-meter (21 million-square-feet) campus to house 15,000 BMW R&D employees, BMW and Munich officials have focused on creating green, welcoming spaces to offset increased density in the city center. (Image © HENN Architects)

“The outcome has been that BMW is expanding in its preferred location. That is good for the city and helps us attract more funding for infrastructure improvements that benefit business and citizens. The success of the project is breeding further successes.”

3D VISUALIZING THE FUTURE

As Detroit reinvents itself and Munich seeks to integrate a project that will fundamentally impact its center city, both have employed 3D visualization technology to help envision the future.

In Detroit, for example, Bedrock has made extensive use of 3D visualizations to demonstrate the impact of its developments on the city and urban life. These visualizations often simulate buildings and their planned uses before they are built. The universal language of 3D helps Bedrock explain its plans to community interest groups, generate understanding and gain acceptance and support, Rosenthal said. “We have a specialist outreach team that holds monthly meetings where we share our vision and listen to what people want. We respect what was there before and work together to create a great environment in which to work, play and live.”

“DIGITAL 3D MODELS CAN EASILY BE ADAPTED AND CHANGED AND THEY GIVE A GOOD FEEL FOR THE SCALE AND DIMENSIONS INVOLVED.”

VOLKER BRAMBACH
PLANNER, MUNICH DEPARTMENT OF URBAN PLANNING AND CONSTRUCTION

In Munich, the master plan for FIZ was developed with help from a competition, won by HENN Architecture of Munich, Berlin and Beijing, in which 3D digital models depicted the entire site and represented each building. The judges used the 3D models to demonstrate the project’s integration with the city’s existing infrastructure.

Milagros Caiña-Andree, member of the Board of Management of BMW AG responsible for HR, sees the advantages of the winning design – not only for integrating FIZ into the surrounding neighborhoods of north Munich, but also for improving communications and work processes. “The concept of open spaces with green yards, pocket parks, squares and green roofs will increase the quality of the work environment for our associates,” she said. “And with landmarks like the accessible neighborhood park in the north of FIZ and multipurpose buildings with public access, we will further improve interconnectedness with the surrounding city.”

                                  In planning for their futures, both Detroit and Munich have used 3D virtual models to help                                                    stakeholders visualize the possibilities. (Image © denisgo / iStock)            

3D visualizations helped explain complex project plans for FIZ to stakeholders – including city authorities, site neighbors, owners of adjacent land and other interest groups, such as those concerned with transport or the environment.

“FIZ is long-term project for BMW,” Baumgartner said. “It’s difficult for someone today to conceive the world of 2040. There will be different ways to communicate and collaborate, and we have to make flexible plans because we do not know what future realities will be.”

Brambach agrees. “We have to deal with very complex sets of issues while making our plans absolutely clear,” he said. “The use of 3D visualizations is of great value to the city planners. They are very useful for explaining the master plan to politicians, planners, local groups and the public. We also use physical models for parts of the city, including the Olympic Park and the old city. Digital 3D models can easily be adapted and changed and they give a good feel for the scale and dimensions involved.”

HIGH-PERFORMANCE PLATFORM

Sunlight Foundation, a nonprofit organization that promotes real-time, online transparency for government information, points out that the benefits of deploying a unified platform for all city and government data leads to significant efficiencies. Such platforms reduce the time required to access data that, in most cities, are siloed in dispersed physical locations and computer systems. By making data more accessible and understandable in an intuitive visual context, 3D visualization also helps stakeholders address urban challenges so that business, social and financial opportunities can be simulated, analyzed and tested before they become reality.

“For Munich, it would be a dream to have a fully interactive digital model of the entire city on a single unified platform,” Brambach said. “One that showed infrastructure, services, transport, schools and hospitals, as well as detailing ownership of buildings and land, could enable greater transparency and more effectively demonstrate how planning challenges are resolved. Combining data from past decades and different departments would add enormous value by allowing people to see the impact of historical changes and help make better informed decisions for the city’s future.”

In Detroit, Cox also is intrigued by the potential of a 3D visualization platform. He conceives of a comprehensive online resource, one that would “let people view the city’s development opportunity packages and requests for proposals on parcels of land,” as a forum for development ideas.

With his background in architecture, design is important to Cox, and 3D visualizations help both the public and city planners fully understand a project at the design stage. “It’s hard to legislate good design,” Cox said. “So we work with a growing expert team of new fresh talent, architects, historic building-preservation experts and planners. They surprise potential investors with their commercial perception and bright ideas. We raise the bar and provide options.”

When officials from Detroit and Munich visit Singapore this summer, they will be able to see first-hand how their host city is developing its Virtual Singapore platform: consolidating existing city data, displaying it visually, and using the Internet of Things to capture and communicate the complex spatial and temporal implications of city life. By analyzing the patterns and interactions among people and their environment, including systems such as transport and waste management, Singapore is helping to lead the way for cities committed to a future that is more efficient, livable and sustainable. ◆

See Detroit’s comeback
http://bit.ly/RevitalizeDetroit

A unique evolution

XYT’s new approach to mobility offers personalization and easy upgrades

Ursula Watson

3 min read

XYT, originally founded in 2007 as France Craft, builds light modular vehicles that consist of only 600 parts, versus the typical 6,000 to 10,000. Using a modular design approach, the vehicles can be personalized and upgraded simply by replacing the modular components. Compass spoke to Simon Mencarelli, CEO and co-founder of XYT, about what makes the startup and its vehicles unique, and what they may indicate about the automotive market’s future.

COMPASS: How did XYT start?

SIMON MENCARELLI: It began with a goal of making cars more cost effective to repair and maintain over the long run. Marc Chevreau, the founder of France Craft and co-founder of XYT, had owned body shops. As an engineer, he was always transforming cars and working on them. He faced the evolution of cars, which were becoming more difficult to repair. He had in mind a modular approach that would simplify the car to where you repair them with a simple toolbox.

What does XYT offer that traditional car manufacturers don’t?

SM: We want to give the consumer the ability to upgrade the car. The design has been thought out in ways where you can remove some parts and add new ones without damaging the car. Since a car is often linked to your status, we want it to be close to your identity. As with shoes or clothes, we want to personalize the automobile.

How so?

SM: It is important to make the right fit between the mobility needs of our customers and what we can provide. We want to make sure we bring the right experience for the right clients and customers. Currently our vehicles can go 100 kilometers (62 miles) in one charge and have a maximum speed of 100 km/hour (62 miles/hour). So, our cars would likely not be a good solution for a traveling salesman.

How much is the consumer involved in the design of their car?

SM: We say that with our vehicles, you can really design it as you like. That’s also part of the value: to open up our business platform through mobility development kits. If consumers want to build their own seats, they can have a maker’s kit and create their own material for those seats. This approach enables us to sell licenses and services to manufacturers, designers and makers for developing new variants and accessories. Our designer is also a street artist who is really famous in the graffiti scene. We want unique designs for our cars, which might be done by him or some of his colleagues, who have different styles.

SIMON MENCARELLI, CEO and co-founder, XYT (Image © XYT)

Would such a high level of personalization increase the longevity of the vehicle?

SM: That’s part of our model – the sustainable part. You can make it your own and change it over time. We will have succeeded if people keep their vehicles longer. Therefore, our revenue streams would move from the production mode to maintenance and the upgrade options.

How long does it take to build a car?

SM: We are able to assemble the car without robots and heavy equipment. It takes about 35 hours to create the car, including the chassis work and welding the steel. For assembly, it takes 27 hours for a single person.

When the owner finishes their order, the system will tell them the car will be assembled two blocks from their place, on a certain date, and perhaps they will attend the final assembly.

XYT’s business model relies heavily on partners to expand its sales reach. Can you touch on your various revenue channels?

SM: Right now we are selling cars, but tomorrow we’d like to move to an expanded business model that generates additional revenue. We see ourselves as a marketplace similar in concept to the smartphone industry, where we create a tech-ecosystem enabling third parties to design and contribute to new accessory designs based upon our vehicle platform.

This creates different experiences not only for the drivers, but for the contributors who can participate as a craftsman or mobile workshop. And, going forward, we also envision advertising and service offerings that enable further participation and revenue opportunity.

Your initial focus is on France, but do you have a geographic rollout plan to build up your orders?

SM: Our approach is a city-by-city approach rather than country-by-country, and we will pick the sites. We have a lot of interest from abroad, with more than 40 contacts registered on our website. We have contacts in Vietnam, Cambodia and China. And in the US, we’ve been to Los Angeles and San Francisco.

New mobility solutions are often focused on urban living, and the suburbs are ignored. But XYT seems to be doing the opposite.

SM: When you live in a downtown area, you don’t really need a car. You have the Metro or the bus. The people in the suburbs need to commute.

How do you envision the future mobility landscape?

SM: There won’t be boundaries but a continuum of solutions. I don’t believe in just car sharing and people not owning cars anymore. To me, it will be a hybrid of some sort that accommodates personalization and added services. ◆

Visit XYT at: www.francecraft.fr
 
Discover the Modular, Glocal and Secure Industry Solution Experience at:  http://bit.ly/modularglocal

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